Friday, December 31, 2010

Smashwords Year in Review, Plans for 2011

Welcome to my annual Smashwords year in review where I report our progress and plans for the new year.

2010 was a breakout year for us. It was also a breakout year for our indie ebook authors and publishers.Exactly two years ago we were publishing 140 books from 90 authors. We thought that was fantastic for our first year in business.

Last year at this time we hit 6,000 books from 2,600 authors and publishers. We were thrilled.

Today we're listing 28,800 books from over 12,000 authors and publishers. We released 3,200 new ebooks in the last 30 days alone. We're pinching ourselves now, not just because of how far we and our authors have come, but because we know we've barely scratched the surface of the possible.

Six years ago Smashwords was a jumble of simple ideas scribbled on a sketchpad. Today it's a reality.

My original idea was simple: Create a free ebook publishing platform that would allow any author, anywhere in the world, to instantly publish an ebook at no cost. Authors, I believed, should have the right to publish whatever they want, and readers should have the freedom to decide what's worth reading.

From the beginning, just about every conceivable odd was stacked against us. When we launched, ebooks accounted for about 1/2 of 1% of the overall book market; self-publishing was considered the option of last resort for failed authors who couldn't find an agent or publisher; and self-published books weren't selling. All the ingredients for a successful business, right? I thought so. I had a hunch all of this would change because it needed to change.

I believed traditional publishers were squandering the future of books. After decades of consolidation, big publishers began sucking the soul out of publishing. They began judging the merits of a book through the myopic prism of perceived commercial potential - a recipe for dumbing down publishing with more milquetoast celebrity books. Wanna buy a book from Justin Bieber, Snooki or the Kardashians?

The shift to this commercial filter meant that authors who otherwise deserved publication were denied the opportunity, therefore depriving readers of their ability to enjoy these books. If you value books, and if you believe as I believe that books are essential to the very future of mankind, then it's time to rise up and do something about it. I've always had this higher purpose in mind with Smashwords. If you look at our logo, the fist symbolizes the indie author revolution.

We're also building a business as we try to change things for the better. In my 20+ years of technology entrepreneurship, I've always been drawn to startups that have the power to effect positive social change. This was certainly the case with my last startup, Bestcalls.com, where I helped level the playing field for small stock market investors.

Smashwords, to me, is the startup of a lifetime. Every day I'm excited to be part of it. Smashwords will only ever be as great as the authors and publishers we enable. Considering the vast reservoir of creative talent we have yet to help unleash upon the world, I'm confident our best days are ahead of us.

Back to the business. What a difference a couple of years make. Today, ebooks account for nearly 10% of trade book sales. This number will probably double in 2011, and as I predicted over at GalleyCat earlier this week, I think on a unit volume basis, ebooks will account for one third or more of all book consumption come December 2011. I never imagined this would happen so fast, and it's possible I'm underestimating the growth this market will experience in the coming year.

After 31 months of advocating the indie ebook gospel, I still wake up every morning invigorated by our possibilities and potential. We attack every day with the tenacity of a newborn startup. Like I said last year, and I'll say it again, we're just getting started.

Some of the highlights of the year in addition to the numbers I shared above:

Distribution highlights:

Smashwords is now one of the largest distributors by title count of indie ebooks to retailers such as Apple, Barnes & Noble, Sony, and Kobo

I'm very pleased with the support these retailers have shown our indie authors and publishers. Retailers are starting to earn real profits from our indie ebooks. This is cause for celebration for all indie authors and publishers, because it means access to more distribution in the future.

In April Smashwords became one of a small handful of global aggregators serving the Apple iBookstore. On launch day of the iPad, we had over 2,000 books in the Apple iBookstore. When Apple launched the iBookstore in Australia, we had nearly 10,000 books in the store.

In December we successfully transitioned all of our retailers to agency pricing. This means authors and publishers set the price at retail, and earn 60% of the list price.

Preliminary sales reports from Apple and B&N indicate that sales tripled in the couple of days following Christmas. It will be interesting to see how these numbers moderate over the coming weeks.

Today, December 31, 2010, we've beat the goal by over a quarter billion words.

We redesigned our web site infrastructure this year to support faster performance and greater reliability. The site's uptime and performance is excellent now, and has been scaling very well as we achieve record traffic each month.

We made multiple enhancements to our Meatgrinder conversion system this year, and as a result the quality of our ebook outputs is better than ever.

A few months ago we reached profitability. Nothing spectacular, and not enough to pay me a salary yet because I'm reinvesting any excess cash back into the business. What this means is the business is now fully self-sustaining and we're adding staff. We're here for good. We accomplished this while also paying some of the highest royalty rates anywhere. Unlike other services that make much of their income by charging authors upfront fees for publishing packages, set-up, conversion, and other services of nebulous value, our services are free and accessible to any author. We believe our interests are aligned with our authors and publishers. The platform we created allows us to take a risk on every author. If we don't sell anything, we don't earn our commission.

What's coming in 2011:

Competitive front: Fight to survive and thrive. Despite our initial traction in the marketplace, our future is by no means guaranteed. We will continue to pursue our business plan with vigor because there's no room for complacency. We've already seen multiple upstart competitors try to launch Smashwords knockoffs. Good luck to them. They'll soon learn how tough it is to make a buck in this business. Have I mentioned I'm competitive?

Distribution: We love ebook retailers because they're expert at putting our ebooks in the hands of readers. Over the next 12 months we'll continue to add more retailers to the Smashwords distribution network, while working to build broader and deeper relationships with our existing retail partners. We understand that authors and publishers often have the option to go direct to retailer. Our mission is to make it more profitable for authors and retailers to work through us. We think we add a lot of value to the ebook supply chain for authors, publishers and retailers alike. If we don't add value, we don't deserve to be here.

Meatgrinder: As I mentioned above, we made a lot of enhancements to Meatgrinder. We'll continue to iterate and improve it in the months ahead, especially in the area of automated TOC detection. We'll also add more error-correction.

Premium Catalog reviews: For most of the year, we managed to maintain one week or less turnaround times on Premium Catalog reviews, though a few times we got backlogged up to two weeks. We're working on plans that should help accelerate Premium Catalog approval cycle times, so we can help you get your book in the catalog and distributed to retailers faster with less back and forth.

Surprises: We have several surprises planned for 2011. I can't tell you what they are otherwise they wouldn't be surprises.

Stretch Goal: Our goal is to hit 75,000 indie ebooks published at Smashwords by December 31, 2011. This means we need to add 47,000 books in 12 months. That works out to 130 new releases each day or one new book every 11 minutes.

Ongoing Education: While I sometimes criticize some of the practices of big publishers, I continue to have enormous respect for professional publishing and the people in publishing. Although we make it easy to self-publish an ebook (some have said "too easy"), we don't make it easy to produce a book worth reading. That responsibility lies in the hands of the author who must now step up to the plate and become a professional publisher. They must adopt proven best-practices of publishing, such as professional editing, revision and proofing prior to publication, and professional cover design. We'll do our best in the coming year to continue to help authors and publishers improve the practice of publishing so they honor their readers with books worth reading.

Smashwords Direct: Right before Christmas, we began working with a large publisher of public domain books to convert and distribute 10,000+ titles across the Smashwords distribution network (the numbers above don't reflect these direct titles). Since we don't accept PD titles at our Smashwords.com retail site, these titles will only go to retailers. In the year ahead, we'll look for additional opportunities to help other large publishers take advantage of our expanding distribution reach.

Smashwords.com Refresh: We're noodling on multiple ideas to give the site a refresh so we can do a better job of showcasing the higher quality titles, as determined by real customer downloads, purchases and reviews. Ever since we launched in May 2008, it was important to me that every new Smashwords book receive its 15 minutes of fame on the home page as a new release. This gives every book a fair and equal chance to find its first readers, and if the book is truly wonderful, the readers can take it viral from there. The downside of this democratized feature process is that everything new hits the home page, and often the work isn't ready for prime time. It might be missing a cover image, or the author didn't properly format it to the Style Guide. Our current policy of showcasing all the latest releases - even the obviously poor ones - ultimately gives first time visitors a warped perspective of the true talent captured within the Smashwords catalog. Another issue I want to tackle is adult content. We're big supporters of free speech, but we often receive complaints from visitors and authors shocked by some of the erotica images they see on the home page - images they'd never see on the home page of another bookstore. We also have kids who hit the home page for their first visit, and such content isn't appropriate for them either. We're working on ideas in this regard that can strike a fair balance, while still allowing our professional erotica authors and publishers to get their books exposed to more customers who are searching for that content. Stay tuned as we work to strike a good compromise that benefits all parties involved.

Responsible Adult Content Publishing: There have been reports that Amazon has clamped down on incest-related titles, and some authors and publishers worry this is the start of a trend toward increased retailer censorship. At Smashwords, we've always articulated a very clear policy in our Terms of Service regarding acceptable content, and we were probably one of the first to define a clear policy against publishing erotica that includes underage characters, even if those characters are bystanders in the story. If the story is intended to titillate, kids don't belong in it. Simple. We've started encouraging our erotica authors and publishers to clearly state inside their books, if not in the book description, that all characters are 18 years of age or older. I think it's important that responsible erotica authors and publishers self-enforce these reasonable guidelines, otherwise retailers will be forced to think twice about carrying such content. Smashwords was founded with a fierce belief in free speech and no censorship, and our conviction on this issue remains true, but that doesn't mean anything goes.

For those concerned about censorship in the retail channel, I can happily report that I'm aware of fewer than a dozen titles that have been outright rejected by our retailers, and in some of those cases the content violated our Terms of Service anyway. In other cases, the authors were able to make minor modifications to cover images to satisfy retailer requirements. This works out to less than one thousandth of one percent of our titles. I think the small number reflects not only the responsibility shown by erotica authors and publishers to comply with our Terms of Service, but also the benefit of our manual vetting process at Smashwords for Premium Catalog distribution. I know our retailers appreciate we self-police. We're also thankful to Smashwords readers and customers who report potential violations to us, so we can work with the author/publisher to proactively remove or fix the content.

My New Year's Thanks to All

To the 12,000+ authors and publishers who entrusted your precious books to Smashwords over the last 2.5 years, and to those of you who stood by us despite our many inevitable growing pains, and who always believed in our commitment to do right by you, thank you for believing in us. We will continue to run our business with the highest ethical standards and transparency as we always have, and will work to earn and deserve your continued trust every day. Happy New Year!

50 comments:

Congratulations to you and your crew, Mark! Congratulations to all of us Indie authors and publishers who have seen this wonderful growth come to pass, and who look forward to even better things to come.

To Mark well done, I just wish I'd tripped over your site a few years ago when we were first looking around for epublishing. Anyway we're here now! Hope you and yours are warm and safe in the chilly northern climes for NYE. With luck I'll have another book to add to your list within the week. Push on smashwords!

On the subject of erotica on the home page, I've read how some people are offended. I could care less, but as a suggestion maybe the home page could have a tab labeled "newest erotica titles" so interested readers could have the choice of clicking on it. Then after clicking on the tab, the page could have the "adult content" label before showing the visitor the new erotica ebooks. Not that any of this would stop kids, but really: Smashwords has to be WAY down the list for kids looking for adult content.

Congrats on your fabulous year! I am so glad you are here, and plan to continue using your platform to help me meet my goals!

A suggestion: On the idea of who gets special focus. I would actually love it if you continue to give everyone a bit of publicity when they publish, but as you noted it, not all books are ready for that the moment they are posted. I would like to see an option where we can post it and send it through the meatgrinder but not make it public yet. That way we have a chance to review the various formats and ensure that things came out as expected. Then let the users decide when to flip the switch that makes it available.

Congrats on a great year and best wishes for an even better 2011 and beyond. I just published my 7th title on Smashwords and have been delighted by the results, level of service, and ability to communicate directly with the team. You are the future--and count me part of it.Dave Donelson

I'm a Smashwords buyer who plans to become a publisher this year. so it's great to see the progress. I'd second the suggestion for better filtering and search. The erotica tempest in a teacup is just that, but if it can be dealt with in a way that doesn't scream censorship or bias, it will make Smashwords look just that much better. Cheers!

Congratulations, Mark. I am one of those rejected writers and am thrilled with your platform. I haven't uploaded my first book yet because I am trying to get a professional cover designed. But "Night Flight" will be up soon and help you reach your goals. I am in San Francisco if you need volunteer help.Best for 2011.Alessa

@David: We remain big believers in Word because it gives our authors great control over the final output. What alternative source formats are you thinking?

@mcahogarth, missymaxim (& anyone else too!). Feel free to email me at first initial second initial at you know where .com - I'd love to hear specific suggestions from SW authors for your what dream refresh might look like. Put "Refresh suggestions" in the subject line so I'll know to pull them aside and file them in my refresh project folder.

@catana/sylvie what do you have in mind for better filtering options? Feel free to email me or comment here.

@wayne: interesting analogy. I've always thought of us as the digital distribution infrastructure, the plumbing that helps the author take their book to market. So by that thinking, I'd like to operate the railroad that helps take your books to the stores. :) Although we also run the small Smashwords.com store, the majority of our sales come from our retail partners on the other end of the train tracks.

@Collette, agreed, we need to do something like that so authors can "sandbox" their book until it's ready for release.

It has been exciting and rewarding to be a part of the amazing growth of this site. Thank you Mark and crew for making this happen.

I do like the idea of giving every author their 15 minutes of fame when their book is just launched, but it also makes sense to highlight books that are selling well. How about both? You could have two columns on the homepage, one for bestselling titles, and one for just released titles. Sort of like how Amazon now has two lists for Kindle books: the top 100 paid and the top 100 free books.

It would also be nice if even on the bestselling books list, there was some kind of rotation so that the same 10 books do not always show up at the top. Maybe a mix of top ranked, fastest selling, best rated and again a rotation of the top several hundred books so that even a good selling book gets another chance at the top of the list once in a while.

@Collette, I really like your idea for "a sandbox," as Mark calls it. We would put our book through the Meatgrinder, and then review, finally hitting the 'on' switch when we're happy with the results. I just published my newest book, Aiden's Arrival, and I'd forgotten how difficult it all was. I would have appreciated some time to review, as the TOC didn't work out properly for some reason.

Anyway, this is a great team, from Mark and his group, all of the authors and publishers, and the readers. Together we are achieving something great.

Excellent news, Mark! The publishing industry needed to be grabbed by the scruff of the neck and given a good shaking, and I think you've done just that.

I predict a lash-back from the industry - probably along the lines of self-publishing isn't real publishing - but I think we can handle that through both increased sales to a widening audience and sheer quality. Anyone in any doubt about that need only take a look at what happened in the music industry after digitisation.

"'The authors' must adopt proven best-practices of publishing, such as professional editing, revision and proofing prior to publication, and professional cover design." Mark, I couldn't agree more. I suggest creating a forum or community within Smashwords.com for Smashwords authors to "crowd source" these services from other authors or graphic designers (for cover design) or folks willing to proof-read and edit manuscripts. I know how hard it is to take off the author hat and put on the hat of an editor or an agent or a publicist or a graphic designer. Some of us Smashwords authors are fortunate to possess more than one of these skills (I'm a cartoonist in addition to being an author). But the majority of us do not. It is the one major area that needs to be addressed to indie authors so they can put the best possible light on their written work. A great novel or book that contains fantastic writing and ideas but is poorly edited or designed is a missed opportunity for an aspiring indie author. This is an area that major publishers excel in. Smashwords needs to provide the opportunity for authors to find these resources.

Would I be willing to design a book cover for another Smashwords author if they would proof-read my 60,000 manuscript? Most definitely. Would other authors be willing to barter their skills and time to other authors for a mutual benefit? I believe so. There are a few ways to approach this: forum, social networking, service marketplace, etc. It's not an author's fault if they don't excel in editing or graphic design. They need the tools and resources to get access to these services. Let's get to work! Good luck to all the indie authors on Smashwords in 2011!

I've thought for some time that slectronic publishing is the future, and Mark and his team are proving it. Well done!

I want to second David Barron's plea for an alternative to Word. I'd vote for Latex and/or PDF.As a Linux user I'm compelled to import my Latex (or LyX) files into Open Office, which takes ages to do and is frustrating and long-winded. Other publishers are happy with PDF or even demand it.

Thanks for all your hard work, Mark. I'll be looking forward to the 'surprises' in 2011!Just one comment about one of the layouts of Smashwords...On the top reviews pages, it seems unfair that a book receiving one five star review will always appear ahead of a book which has say, fifteen five star reviews and a couple of four star reviews. Any chance of sorting the reviews out so they are a bit more fair? For example, it being a combination of the number of reviews received as well as the number of stars?

Great review, Mark. My congratulations to all you and those around you have succeeded in achieving this past year. For me, I'm proud to be one of the new Smashwords authors (Last February was when I joined and uploaded my first book). I tell everyone everywhere about Smashwords and how easy it is to download eBooks from there to the Kindle or any other eReader.

Looking forward to your success, because that means my success as well.

you saw the potential 6 years ago and your hard work has paid off. Within a couple of years you will have a business the envy of many, and I congratulate you for that.

I also thank you for the chance to share my work with the rest of the world. I have only uploaded 4 short stories so far, but with the encouragement I have had from the indie market I am working on my first novel.

I hope 2011 brings me as much success as it will undoubtedly bring you.

Hi Mark and everyone at SW,We had a fantastic year at Smashwords and are hoping and praying for an even better one. Thanks so much for all the ways to get our stories out to our readers and for providing a place for authors to be in control of their work. From the authors ofWestern Trail BlazerVictory Tales PressPublishing by Rebecca J. Vickery

Great to see how far you guys have come and your plans to continue to grow and improve. A few months ago, I didn't have my kindle yet and I'd never heard of Smashwords. Now I'm an ebook author, and I've even made a few sales. Yay! :)

All the success to Year 2011 Mark!Have you had any authors, from Finland? I am looking forward to see some movement from educational point of view. Hoping to get high school books to iPad in the near future. We can deliver the lesson online and saved, so our Students athletes are so pleased when they are not at school, to get lessons, but the books are in the back back and that is what they are waiting for.Jukka Sormunen,High school principalKuopion klassillinen sport high school, Kuopio, Finland

I must admit, at first I considered Smashwords nothing but an intermediary between no publishing and real publishing, yet the more I have worked with you and your system, the less appeal going to a real publisher seems. Thanks for all your effort and time making Smashwords what it is: the greatest tool an independent author could ever hope for!

Thanks for everything you've done. I'm a writer who has won several awards for my writing, but have been going through the frustration of:* Publishers won't even look at your books or ideas* Some agents accept them but 4 months later they haven't responded, and then you send it to another agent and 4 months later they haven't responded either.

As you said, something had to change - and through people like you it's changing.

Mark,Thanks for the opportunity you have given us. I'm pleased to continue adding my books, and the books of my late husband, Don Pendleton, to Smashwords--and to the retailers. It's obvious you have worked hard to make this all possible. I look forward to a great new year, 2011. Linda

I too, support free speech. However, why is the functionality to turn-off smut/trash called a "prude filter"? That is a subtle slam against those that disagree with such content. Why not call it the "the garbage disposal"?

Thanks to the foresight and hard work of Mark and the Smashwords team, I believe we'll see some interesting shifts in popular culture in the next few years. For example, what will the bestseller lists look like when readers have the power to determine trends, rather than being limited to the titles that have filtered through acquisition committees at publishers?

On the flip side, indie authors must be more diligent than ever about putting out a quality product; well edited, well written work that respects readers' time and money. Smashwords provides a great opportunity, but it's up to us as writers to earn our readers' respect.

I finally got around to reading this and I must say that I am very impressed by your diligence, stick-to-it-of-ness, and keeping the faith. I know how tough it is to not just start a website but to keep it going, drive traffic, and stay up. It aint easy. Anyway times are so revolutionary... and you are one of those guys. Keep up the great work, Mark!

Congrats, Mark, on your breakout year - and a heartfelt thanks for the Smashwords platform that gives us indie authors one more opportunity to snatch that brass ring. Looking forward to a close relation with Smashwords for a long time.

It's been very exciting to get on board with Smashwords in recent months. I can't wait to see what these "surprises" are, Mark - it's already been fun just to get in the ring with my ebook.

Fellow writers, I have been inspired by your trailblazing. I've begun to delve further into what's new in electronic publishing and other digital media and am looking forward to seeing more great work from you to feature on my blog! Best of luck to all in 2011.

An excellent post. One other element that I have noticed, and it is a significant one, is that the big publishers are bureaucracies, and many writers are "entrepreneurs." The staffs of these behemoths are 9 to 5 types, who grind through the production of book after book. My experience with them is that they have very little passion for what they do--the book you slaved years over is just another bundle of paper to most of those people. How can anything great come from this? It's a one reason the output from the large publishers is so lousy.